strategic bitcoin reserve: a new federal approach
This is a guest post by Colin Crossman. Opinions expressed are solely theirs and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
funding mechanisms and economic impact
To lessen the effect on taxpayers, the Act incorporates several strategies for financing Bitcoin acquisitions, maintaining economic viability without heightening federal debt.
By utilizing available financial resources and capitalizing on the economic worth of gold, the BITCOIN Act seeks to amass Bitcoin without imposing direct costs on taxpayers or raising federal debt levels. This comprehensive strategy highlights the inventive financial approaches the Act employs to weave Bitcoin into the national reserve system, paving the way for a thorough Bitcoin policy across all tiers of the U.S. government.
Source: bitcoinmagazine.com
The creation of the Strategic Bitcoin Reserve (SBR) represents a significant change in how the U.S. government oversees and stores Bitcoin at the federal level. Emulating many of the optimal strategies currently under discussion, such as geographically distributed keys, a requirement for cold storage, and independent audits of reserves, the SBR establishes a decentralized framework of secure Bitcoin storage locations throughout the United States. (Interestingly, while a multi-signature system is not explicitly referenced, it is also not ruled out.) Consequently, the Act is designed to mitigate risks associated with breaches and vulnerabilities stemming from a single disastrous incident.
Additionally, the Act includes an adjustment to the pricing of gold certificates held by the Federal Reserve. At present, the Federal Reserve possesses gold certificates valued at .22/oz, whereas the market price of gold is about ,400 today. This effectively compels the Federal Reserve to update the valuations of its gold certificates to market standards and send remitted gains from the gold back to the Treasury to finance the initial purchase.
Initially, it suggests an amendment to the Federal Reserve Act to reallocate discretionary surplus assets from the Federal Reserve Banks. This action decreases the discretionary surplus from .825 billion to .4 billion. The Federal Reserve is then obligated to send net earnings to the Treasury, with the Act steering the first billion towards Bitcoin purchases.
